Bonds are an important financial management tool, but investors should still master some necessary knowledge before investing in bonds.
bonds have always been an important financial management tool that is ignored by ordinary investors.
Due to its huge capital volume, relatively stable price fluctuations and relatively controllable default risks, bonds are actually 's very excellent investment target .
money market funds we are familiar with, and their main investment direction is also a package of short-term bonds. In addition, bonds also have an unshakable position in the asset allocation of other types of funds.
Of course, ordinary investors still need to master some necessary knowledge before deciding to invest in bonds.
What is a bond?
Bonds are debt and debt certificates issued to investors when governments, financial institutions, industrial and commercial enterprises and other institutions directly borrow money from the public to raise funds, and promise to pay interest at a certain interest rate and repay the principal according to agreed conditions.
bond buyer and issuer are "a kind of creditor-debtor relationship, the bond issuer is the debtor, and investor (or bond holder) is the creditor . The main characteristics of
bonds include:
repayment: Bonds generally have a repayment period, and issuers must repay the principal and pay interest according to the agreed conditions.
liquidity: Bonds can generally be transferred freely in the circulation market.
security: Compared with stocks, bonds usually stipulate a fixed interest rate, have no direct connection with corporate performance, have relatively stable returns and are less risky. In addition, when a company goes bankrupt, bond holders enjoy priority over stock holders to claim the remaining assets of the company .
profitability: The yield of bonds is mainly reflected in two aspects. One is that investing in bonds can bring interest income regularly or irregularly to investors; the other is that investors can use the changes in bond prices to make the difference by buying and selling bonds.
Bond market is a place for issuing and buying and selling bonds, and is also an important part of the financial market. According to different classification standards, bond varieties can be divided into different categories:
Figure: Summary of bond varieties in my country
Price and yield of bonds
What is a bond price?
bond price, including issue price and transaction price.
When the bond issuance price is higher than the face value, it is called a premium issuance; when the bond issuance price is lower than the face value, it is called a discount issuance; when the bond issuance price equals the face value, it is called a parity issuance.
bond transaction price refers to the transaction price of investors transferring bonds in the secondary market. Some bonds are inactive and have not been traded within a few months or even a year.
In this case, some institutional investors usually use third-party valuations, such as the bond valuation of the Central Treasury Registration and Settlement Company and the China Securities Index Company to measure the value of the bond.
What is bond yield?
Bond yield is the ratio of bond yield to its principal invested, usually expressed as annual rate. Bond yield is different from bond interest, and bond interest only refers to the product of the face value of the bond and the face value of the bond.
The main factors that determine the bond yield are the face value of the bond face value, term, face value and purchase price of the bond .
The most basic formula for calculating bond yield is:
Bond yield = (primary and interest due and - issue price) / (issue price * repayment period) * 100%
Bond market trading rules
At present, my country's bond market is divided into two: interbank bond market and Shanghai and Shenzhen Stock Exchange market .
The former covers more than 70% of the trading volume of the entire bond market and is called the main battlefield of the bond market, but only institutional investors are allowed to trade, and retail investors usually trade in the latter.
The trading rules for the Shanghai and Shenzhen Stock Exchanges debt market are as follows:
Trading time: Every Monday to Friday, from 9:30 am to 11:30 am, from 1:00 to 3:00 pm, except for legal public holidays,
Trading unit: in " lots", 1 lot is 10 100 yuan face value bonds, that is, the threshold of 1,000 yuan
Trading method: T+0, that is, the bonds bought on the same day can be sold on the same day
Rapid and fall rate: no limit-up
transaction fees, brokers need to charge customers two-way commissions (including fees). Currently, the single commission is 2/20,000 .
. Stamp duty, settlement fee, etc. vary slightly depending on the type of coupon. Investors can search in the charging standard document of CSI Deng Company, or ask the account opening business department. Overall, the transaction fees of bonds are lower than those of in stocks.
It should be noted that except for government bonds, the interest on other bonds is subject to 20% interest tax . The higher the face interest rate of the bond, the higher the interest tax.
Therefore, tax avoidance is a must for individual investors. Simply put, tax avoidance operations are: sell before paying interest and buy back after paying interest.
Common investable bond varieties
Since the central bank, interbank certificates of deposit and low-grade bonds only allow banks and institutions to trade, retail investors can choose from in the bond "basket".
Common investable products include treasury bonds, corporate bonds, convertible bonds and bond funds.
Treasury bond
Treasury bond is a non-circulated registered treasury bond variety issued to individual investors by the government (Ministry of Finance) to absorb personal savings funds to meet the long-term savings investment needs. It is generally divided into voucher-type Treasury bond and bookkeeping treasury bond . The former can be purchased at a bank and held to pay interest upon maturity, while the latter can be circulated on an exchange.
Generally speaking, medium and short-term government bonds are almost risk-free, also known as "golden-edge bonds", but the yield of government bonds is lower than other varieties and has weak liquidity (need to be held to mature).
Exchange corporate bond
Corporate bonds are a debt contract issued by joint-stock companies. The company promises to repay the principal and pay interest at the pre-specified interest rate on a specific date in the future. requires that corporate bonds with higher risks usually provide higher returns.
At present, ordinary investors can trade corporate bonds issued by Shanghai and Shenzhen stock markets like buying stocks. Due to the implementation of T+0 transactions, corporate bonds have good liquidity and low risk.
There are two main sources of income for corporate bonds. In addition to obtaining interest and principal at a fixed time, they can also sell at high prices through the Shanghai and Shenzhen Stock Exchange markets, and lock in returns by buying low and selling high.
convertible bond
convertible bond is an option attached to the issuance of corporate bonds, allowing the purchaser to convert it into the stock of the designated company within the specified time, and the face value rate is usually low.
convertible bonds have the following three characteristics:
, one is debt-oriented, with specified interest rates and periods, investors can choose to hold them to maturity and collect principal and interest;
, the other is equity, before being converted into stocks, it is a pure bond, but after being converted into stocks, the original bond holder becomes a shareholder of the company, and can participate in the company's business decisions and dividend distribution.
Third, convertibility, convertibility is an important symbol of convertible bonds. Bond holders can convert bonds into stocks according to agreed conditions.
Since convertible bonds can achieve "there is a guaranteed bottom, and no cap on top" , it is equivalent to a bond + option, so it can build an investment strategy that is both offensive and defensive, and is sought after by many investors.
Bond Fund
Although the exchange market allows retail investors to trade, because the liquidity of the bond market is not as abundant as the stock market, investors are not very motivated. Therefore, ordinary investors can also participate in the bond market bull market through bond funds.
Generally speaking, the subscription and subscription fees of bond funds are low, the redemption fee is not high, and the cost is controllable. It is the best way for ordinary investors to indirectly participate in bond market investment.
But it should be noted that unlike the exchange T+0 mechanism, bond funds usually require 1-3 trading days of redemption time.
Risk of investing in bonds
1. Default risk
Default risk refers to the risk that the borrower who issuing the bond cannot pay the bond interest or repay the principal on time, which brings losses to bond investors.
Simply put, if the company goes bankrupt, it will not repay you principal and interest.
2. Interest rate risk
bond interest rate risk refers to the risk of changes in bond prices and yields causing investors to suffer losses due to changes in interest rates.
Bonds are a legal contract, and the face rate of most bonds is fixed (except for floating rate bonds and preservation bonds). When market interest rates rise, bond prices fall, causing losses to bond holders' capital.
Therefore, the longer the bonds purchased by investors are from the maturity date, the greater the possibility of interest rate changes and the relatively greater the interest rate risk.
3. Liquidity risk
Exchange stipulates that has suffered losses for two consecutive years, and bonds will be suspended from trading in . It is more than 10,000 times stricter than the delisting standards of stocks.
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